Lloyds Banking Group chief executive, Antonio Horta-Osorio, has said the
banking industry urgently needs to address its image problem if it is to
attract the best graduates in future.

Antonio Horta-Osorio highlighted Lloyds' increased financing of mortgages for first-time buyers and smaller businesses as among the initiatives being undertaken to improve the bank's reputationPhoto: AFP

Mr Horta-Osorio warned that a new survey that found just 2pc of students would consider a career in financial services showed the sector had to "urgently" change young people's impression of banks.

"We need to take steps as a sector towards rebuilding our reputation through how we behave and what we do. In tandem with this we urgently need to address the perception of banking as an attractive career opportunity for young people," said Mr Horta-Osorio, speaking in Oxford.

He added: "The next generation should see banking as an industry that helps to build economic wealth and is playing its part as a useful member of our local communities."

Research for Lloyds by YouGov found that a quarter of students would be embarrassed to tell their parents if they got a job with a bank, while 41pc said they distrusted banks and financial services providers.

Banks have seen their reputations tarnished in the wake of the financial crisis by a series of scandals, including the rigging of global interest rates, the mis-selling of payment protection insurance and interest rate hedging products, as well as money laundering for terrorist organisations and drug gangs.

Lloyds has set aside more money than any bank to compensate customers mis-sold PPI.

So far the bank has made a provision against PPI of more than £6bn, as well as £300m for interest rate swap mis-selling.

In his speech, Mr Horta-Osorio highlighted Lloyds's increased financing of mortgages for first-time buyers and smaller businesses as among the initiatives being undertaken to improve the bank's reputation.

"We want the best and the brightest to see banking as a credible career choice. This is vital for the industry's long-term viability," he said.

Lloyds is currently looking for a new chairman after Sir Win Bischoff confirmed his retirement from the bank on Monday.

Paul Tucker, the Deputy Governor of the Bank of England; David Roberts, deputy chairman of Lloyds; and Lord Davies, the former chairman and chief executive of Standard Chartered, are seen as potential replacements for Sir Win.

Anthony Watson, Lloyds's senior independent director and a former fund manager, is leading the search for Sir Win's replacement.

His departure comes as the government gears up to begin the first sale of part of the taxpayer's 39pc stake in the bank. Mr Horta-Osorio has indicated a sale could take place as early as the second half of this year.